The three mobile carriers showed mixed results in their first-quarter earnings. SK Telecom continued its strong performance, driven by steady growth in key businesses such as wired and wireless communications and enterprise services. In contrast, KT, which is experiencing a management vacuum, and LG Uplus, which suffered from a personal information leak incident, posted somewhat lackluster results.
On the 11th, KT announced that its consolidated sales for the first quarter of this year reached 6.4437 trillion KRW, with an operating profit of 486.1 billion KRW. Sales increased by 2.6% year-on-year, while operating profit fell by 22.4%. On a separate basis, sales rose 0.2% to 4.619 trillion KRW, and operating profit decreased by 9.7% to 388.1 billion KRW.
KT explained the sharp drop in operating profit by citing a base effect from the previous year's one-time real estate gain of 74.6 billion KRW from the sale of the Mapo Solution Center, as well as increased cost burdens due to inflation.
Industry insiders believe that the management vacuum has led to operational gaps in major subsidiaries, impacting performance. Under former CEO Koo Hyun-mo’s leadership, the company had been expanding partnerships in new business areas as part of its DigiCo strategy. However, due to the management vacuum, business initiatives have become uncertain, and new investments and construction orders have effectively come to a halt.
In April, KT formed the ‘New Governance Establishment Task Force’ and has begun the process of appointing outside directors based on improved appointment procedures. Since it is expected to take about four months to normalize management, the decline in performance is likely to continue for some time.
LG Uplus also showed weak results. The company posted consolidated sales of 3.5413 trillion KRW and an operating profit of 260.2 billion KRW in the first quarter. Compared to the same period last year, sales increased by 3.9%, while operating profit decreased by 0.4%. Service revenue, excluding device revenue, was 2.8243 trillion KRW, up 1.8% year-on-year.
The impact of the personal information leak and DDoS attacks causing service disruptions was significant. Yeom Myung-hee, LG Uplus’s Chief Financial Officer (CFO), explained, "Compensation related to the DDoS disruption was temporarily reflected in the first quarter, which resulted in lower growth rates for smart home and enterprise infrastructure services."
She added, "The smart home segment grew by 2.2%, falling short of expectations. Although the enterprise infrastructure’s Internet Data Center (IDC) grew by more than 20%, messaging revenue, which had increased due to last year’s elections and COVID-19, declined."
Amid the poor performances of these two companies, SKT was the only one to meet market expectations. SKT recorded consolidated sales of 4.3722 trillion KRW and an operating profit of 494.8 billion KRW in the first quarter, representing increases of 2.2% and 14.4%, respectively, compared to the same period last year. Net profit rose 37.3% year-on-year to 302.5 billion KRW.
On a separate basis, SKT posted sales of 3.1173 trillion KRW and operating profit of 415.7 billion KRW, growing 1.3% and 16.5% year-on-year, respectively. SK Broadband recorded sales of 1.0615 trillion KRW, up 3.5% year-on-year, with operating profit increasing 0.1% to 76.1 billion KRW.
By business segment, the media business posted sales of 393.2 billion KRW, growing more than 10% year-on-year, showing significant growth. This was attributed to quantitative growth across the media business, including content, advertising, and commerce, based on solid wired and wireless leadership.
In the wired market, SKT continued subscriber growth by achieving first place in net additions for IPTV and high-speed internet. As of the end of the first quarter, the number of paid broadcasting subscribers was 9.4 million, and high-speed internet subscribers numbered 6.76 million.
This year, SKT is aggressively pushing its transformation and leap forward as an AI company. Leveraging years of accumulated AI services and technological capabilities, it plans to lead innovation centered on five key areas: customer & technology, space-time, industry (AIX), Core BM, and ESG, under the ‘AI to Everywhere’ strategy.
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